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The proposed transaction would be structured as an offer by TelecityGroup for Interxion.

Interxion Holding N.V. has announced that it has reached a non-binding agreement on an all-share merger with TelecityGroup plc. The proposed transaction would be structured as an offer by TelecityGroup for Interxion and the primary listing for the combined group would be in London, where TelecityGroup’s shares are admitted to trade on the London Stock Exchange; with a New York Stock Exchange listing for TelecityGroup’s existing ADR program contemplated.

TelecityGroup, headquartered in the United Kingdom, is a provider of data centers, operating highly connected facilities in key European cities.

The boards of Interxion and TelecityGroup believe the combination of TelecityGroup and Interxion businesses is highly compelling. Demand for data center services is evolving rapidly as enterprise data and digital applications migrate to the cloud. The combined business will allow the parties to provide customers with greater product choice and solutions for the dynamic and expanding needs of multi-faceted customers seeking to address global markets. The additional scale and scope of the combined operations will give customers an expanded product set, more robust connectivity choices, better landing points for access to European consumers and expanded gateways to new markets in Africa, Asia, and Eastern Europe.

Further, the key benefits of the proposed combination would include:

Enhanced complementary customer offerings using the best practices of TelecityGroup and Interxion which, coupled with the expanded geographical footprint of the combined group, will give customers access to the combined portfolio of services across Europe;

Significant synergy potential. Incremental EBITDA from cost synergies and enhanced growth opportunities are estimated by TelecityGroup to be approximately £40m per year and capital expenditure synergies are estimated by TelecityGroup to have a net present value of approximately £300m. In total, this equates to a net present value of total synergies of approximately £600m. In addition, TelecityGroup would expect substantial incremental benefits from technology, capital productivity and commercial synergies, as well as tax and other financial synergies; and

Enhanced access to the capital markets and the opportunity of a lower cost of capital. Combined balance sheet strength and capital allocation discipline would enable the combined group to capitalise on future growth opportunities as well as deliver predictable capital returns to shareholders.

Under the terms of the non-binding agreement, Interxion shareholders would receive 2.3386 new TelecityGroup shares per Interxion share. As a result, Interxion shareholders would own approximately 45%, and TelecityGroup shareholders approximately 55%, of the combined group. The primary listing for the combined group would be in London with a New York Stock Exchange listing for TelecityGroup’s existing ADR programme contemplated.

John Hughes would be chairman of the combined group, with John Baker as deputy chairman. David Ruberg would be appointed chief executive officer of the combined group for a period of 12 months following completion of the transaction. He would lead the new, combined group and launch this exciting new phase for both TelecityGroup and Interxion. Eric Hageman would be appointed Chief Financial Officer. The board of the combined group would comprise a balance of independent non-executive directors from both TelecityGroup and Interxion.

Interxion Chairman John Baker said, “I believe that the combination of InterXion and Telecity represents an attractive value creation opportunity for our shareholders, with improved access to capital markets, reduced cost of capital and a strong balance sheet”.

Interxion CEO David Ruberg said, “Bringing together the assets and solutions offered by Interxion and Telecity will improve our customers’ ability to realize the benefits of transitioning to the cloud. Together, we expect to be able to further reduce our customers’ total cost of operation, help them deliver improved functionality to their customers, and deliver industry leading quality of service.”

TelecityGroup Executive Chairman John Hughes said, “We think that the combination of TelecityGroup and Interxion would represent an extremely compelling combination for all stakeholders of both companies. The transaction would truly transform both organisations and allow them to deliver a superior proposition to the joint customer base. In particular, we would like to thank David Ruberg for his key contribution in orchestrating this proposed transaction and we are delighted that he has agreed to launch the new combined group.”

Signing of a binding transaction agreement is subject to, amongst other things, satisfactory completion of mutual due diligence, approval by the Interxion and TelecityGroup’s boards of directors and the negotiation of definitive transaction documentation. Interxion and TelecityGroup have agreed not to solicit or discuss alternative proposals until 4 March 2015 by which time it is expected that a binding transaction agreement will be entered into. Completion is anticipated in the second half of 2015,subject to Interxion and TelecityGroup shareholder approvals and all relevant regulatory and antitrust approvals.

There can be no certainty that a binding agreement will be reached, nor as to the terms of such agreement.

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